Bitcoin mining machine iteration: an "arms race" triggered by 7nm chips

Since the second half of 2018, driven by the continuous innovation of chip manufacturing processes by TSMC and other top global chip companies, 7nm chips have been mass-produced.

Almost at the same time, Bitcoin mining machines packaged with 7nm chips came out on the market, and their performance was improved in all aspects, becoming very popular for a while.

The performance of the previous generation of mining machines using 16nm chips is slightly behind that of the new mining machines. When the 16nm mining machines are facing the challenge of 7nm mining machines, the upcoming flood season, which will cause the mining difficulty to soar, will bring new challenges to the 16nm mining machines.

In this context, will 16nm mining machines be eliminated? Do 7nm mining machines have an absolute advantage? Driven by technological progress, whether 2019 will become a key node for the upgrading of Bitcoin mining machines has become a question that miners must think about.

1

7nm mining machine "grand occasion"

Since the second half of 2018, domestic and foreign mining machine manufacturers such as Japan's GMO, Bitmain, and Canaan Creative have successively launched 7nm mining machines. Chen Feng, the mining machine marketing director of Canaan Creative, even publicly stated that the company is already planning to develop 5nm chips.

Judging from the public data of several manufacturers, the new generation of mining machines have been greatly optimized and improved in terms of both performance and power consumption.

Taking Bitmain's first-generation 7nm mining machine S15 as an example, the energy efficiency ratio of this mining machine is 57J/T, which is 50% lower than the energy efficiency ratio of the S9 mining machine of 100J/T. This means that when mining one bitcoin at the same time, the power consumption of the S15 mining machine can be saved by at least 50%.

Energy efficiency ratio refers to the energy consumed to generate 1T computing power per unit time.

In the mining industry, where electricity is a top priority, such efficiency improvements are of vital importance.

At the same time, the 7nm mining machines themselves are also being updated. In this regard, Bitmain is ahead of Canaan Creative and Japan's GMO.

In April this year, Bitmain launched its second-generation 7nm mining machine S17. According to Bitmain's official website, the Antminer S17Pro is equipped with Bitmain's second-generation 7nm chip BM1397, with a computing power of up to 53TH/s in standard mode and an energy efficiency ratio of 39.5 J/T, and an energy efficiency ratio as low as 36J/T in low-power mode.

The power consumption of the second-generation chip has been significantly reduced again.

According to information on Bitmain’s official website, the S17 mining machine was sold out within 5 minutes after it was launched in April this year.

Many powerful manufacturers have launched the latest models of mining machines, and the entry of 7nm into the market seems to be a foregone conclusion.

So, can these 7nm mining machines that seem to have powerful performance and have made great progress in energy efficiency really win the hearts of miners, help the upgrading of mining machine products, and successfully replace the previous generation of 16nm mining machines?

Will the grand occasion of 7nm mining machines really come?

2

Can 7nm mining machines win the hearts of miners?

"The only factor that determines whether miners update their mining machines is the input-output ratio. If the machine has high computing power, low power consumption, and the price is affordable enough, miners will be motivated to replace their mining machines," said Lin Hai.

Lin Hai is a veteran Bitcoin miner. Currently, his mine is mainly powered by Bitmain's Antminer S9. He has his own opinion on whether it is time for the mining industry to upgrade its mining machines.

"On the other hand, if the mining machines are expensive and the previous generation of mining machines are profitable, then miners will have no motivation to replace them with new equipment," Lin Hai told 31QU.

In Lin Hai's opinion, only if the new mining machine is affordable enough can it attract miners. So, are 7nm mining machines affordable enough?

Let’s first compare the current profitability of 7nm mining machines and 16nm mining machines.

The latest data from F2pool shows that based on the comprehensive electricity fee of 0.45 yuan, the S9 mining machine is still profitable, and the current coin price is much higher than the shutdown price of the S9.

For Lin Hai, from the perspective of the profitability of mining machines alone, he has no motivation to change mining machines.

On the other hand, the selling price of the 7nm mining machine also made Lin Hai completely give up.

"The current price of an S17 is 15,000 yuan. Under the current mining situation, old mining machines are more advantageous," said Lin Hai. "Now the price of a second-hand S9 is only about 1,000 yuan, and the daily net profit is more than 3 yuan. If the price of the currency rises again, the profitability will be even better if the increase in mining difficulty is not large."

Mining difficulty increased by 14.1%, but Bitcoin price rose by more than 60%

So, is it possible for new mining machines to "win" the attention of miners by lowering prices?

"In fact, it is difficult to lower the price of 7nm mining machines at present, because this kind of dedicated mining machine chip costs a huge amount of money from design to application, and then to the design and testing of the entire mining machine, and then to the market. It is definitely not a matter of one day or one night to recover the cost." Lin Hai told 31QU.

Although there is currently no way to know the R&D costs of Bitmain's Ant S17 and Canaan Creative's Avalon A9, it can be inferred from the fact that the 7nm mining machine designed and manufactured by Japan's GMO company cost 10 billion yen (equivalent to 650 million yuan) that the R&D costs of Bitmain and Canaan Creative's 7nm mining machines should also be in the hundreds of millions.

“The only way to lower the price is to wait for the mining machines to go into mass production. Once the shipment volume is large, the R&D costs will be easy to recover, and lowering the price of the mining machines will be a natural thing,” said Lin Hai.

At the same time, we contacted the head of the marketing department of a mining machine company, and he confirmed that the current scheduled shipment volume of 7nm mining machines is average and has not become the focus of these companies' product sales.

It seems that 7nm still has a long way to go if it wants to win the hearts of miners.

But for now, the 16nm mining machines represented by the Ant S9, which the mining circle relies on, are facing the pressure of "inter-generation competition" from the constantly updated 7nm mining machines, and the upcoming surge in computing power caused by the cheap hydropower in Sichuan. With the cost of mining facing continuous increases, can the 16nm mining machines withstand it?

3

Intergenerational competition from 7nm mining machines

"The 16nm mining machine itself is facing the problem of inter-generational competition." Lin Hai said.

The so-called inter-generational competition of mining machines refers to the energy efficiency competition among mining machine chips when there is a generation gap. For example, there is inter-generational competition between 55nm mining machines and 16nm mining machines.

The chip process has been optimized and developed step by step in the order of 110nm, 55nm, 28nm, 16nm, 12nm/10nm, and 7nm.

Generally speaking, when there is inter-generational competition, mining machines with more advanced performance can completely crush old mining machines, thereby promoting the upgrading of the entire mining machine industry.

Taking the 16nm mining machine as an example, the performance and price of the 16nm mining machine represented by Antminer S9 are better than those of S1 using 55nm chips. Under the same conditions, the mining capacity of S9 is 22.5 times that of S1. In terms of price, when Antminer was launched in December 2013, the price was as high as 22,000 yuan. When S9 was launched in June 2016, the price was only 14,000 yuan.

From past data, it can be seen that whether it is the energy efficiency of mining machines or the selling price, there is an overwhelming advantage between the two generations of mining machines, S9 and S1.

So, can such a generational advantage still appear on the S9 and S17 mining machines?

"At present, although the S17 pro uses a 7nm chip and the S9 uses a 16nm chip, there is a generation gap between the mining machines, but it does not show the generational advantage like the S9 and S1." Lin Hai said.

Taking Bitmain's most powerful 7nm mining machine Antminer S17 pro as an example, the mining machine has a computing power of 53T, a power consumption of 2520W, and an energy efficiency ratio of 47J/T. In comparison, the Antminer S7 mining machine with the largest shipment volume on the market has a computing power of 14T, a power consumption of 1350W, and an energy efficiency ratio of 97J/T.

The energy efficiency ratio of Ant S17 pro is twice that of Ant S9, but the gap is not as huge as that between S9 and S1.

"In fact, if BOOST overclocking is enabled on the S9, the energy efficiency ratio can be increased to 70J/T," said Lin Hai. "After enabling this function, the performance of the S9 will be further improved."

Some technical experts believe that the reason for this situation is that the raw materials of semiconductors are still based on silicon, which means that the chip process may have reached the end of Moore's Law. This was already evident when the 14/16nm technology was first introduced.

Moore's Law was proposed by Gordon Moore, one of the founders of Intel. It states that when the price remains unchanged, the number of components that can be accommodated on an integrated circuit will double approximately every 18-24 months, and the performance will also double. In other words, the computer performance that can be purchased for each dollar will more than double every 18-24 months. This law reveals the speed of progress in information technology. Although this trend has continued for more than half a century, Moore's Law should still be considered an observation or speculation rather than a physical or natural law. The law is expected to continue until at least 2015 or 2020. However, the update of the 2010 International Semiconductor Technology Development Roadmap has slowed down at the end of 2013, and the density of transistors is expected to double only every three years thereafter.

That is to say, as the nano-processing of chips advances, products will not see as rapid performance improvements as before.

At the same time, Jiang Zhuoer, the founder of Litecoin, holds a similar view. He believes that "the 16nm mining machine will become the sub-ultimate mining machine."

From this perspective, the Ant S9 mining machine can withstand the competition from the previous generation.

If this is the case, then why are so many manufacturers so actively promoting 7nm mining machines? What is their intention? Is it market-driven or an arms race?

4

Is 7nm mining machine an arms race or market driven?

"The progress of chip technology is due to the improvement of manufacturing processes of chip companies such as TSMC, GlobalFoundries, UMC, and Samsung. These technological advances have promoted the progress of hardware equipment." Lin Hai said, "After the 7nm chip is manufactured, it will first be used in major mobile phone manufacturers such as Apple and Huawei, and then it may be the turn of mining machines."

In other words, the 7nm mining machines of many mining machine manufacturers are based on the mature 7nm chip technology.

"The complexity of chip manufacturing process is by no means comparable to low-threshold assembly plants like Foxconn. It is a very technical job," Lin Hai told 31QU.

The meaning of numbers such as 10nm and 7nm: a chip is made up of transistors distributed and arranged on crystalline silicon. nm represents the minimum distance between two adjacent transistors. The smaller this number is, the more transistors can be packed into the same volume, and the better the chip performance will be.

“The upgrade of mining machines is actually driven by technological progress,” said Lin Hai. “It is normal for mining machine manufacturers to want to gain a foothold in the 7nm era.”

At the same time, as the computing power of the entire Bitcoin network continues to grow and the difficulty of mining increases day by day, but the price of Bitcoin has not increased at the same pace, the mining industry is also looking forward to the emergence of mining machines with higher energy efficiency and more affordable prices to reduce mining costs.

Since the second half of 2018, the price of Bitcoin has fallen by more than 50%. At the same time, the mining computing power has also undergone tremendous changes. A large number of Ant S9, T9 and other mining machines were even close to shutting down or struggling to operate at some point in time.

“During that big crash, if the S9 had not been overclocked, it would have died long ago,” Lin Hai said. “That is to say, although mainstream mining machines such as the S9 are still profitable and still occupy a large share of the mining machine market, it is time to upgrade them.”

It seems that the new models of mining machines are both the product of the "arms race" among mining machine manufacturers and the result of market push.

Conclusion

In any case, the 7nm mining machine still has a long way to go if it wants to successfully attract the attention of miners, replace the previous generation mining machines such as S9, and become the darling of the mining circle.

The process of mining machine upgrades can never be determined by a single factor.

This process is the result of the combined effects of factors including the continuous advancement of chip technology, the continuous improvement of mining machine design technology, and the continuous promotion of the capital market.

Text/ 31QU Guofeng